Mahindra War Room 2017 Information Technology - Digital Transformation Caselet

MAHINDRA INFORMATION TECHNOLOGY SECTOR

ACING THE ERA OF DIGITAL TRANSFORMATION

Way back in 1986, Mahindra saw the IT wave coming, and formed Mahindra British
Telecom, a joint venture with British Telecom, to provide targeted IT solutions to the
rapidly emerging Telecom sector. The company specialized in offering Operations
Support Systems (OSS) such as Network Inventory, Service Provisioning, Network
Configuration and Fault Management. Before 1980, OSS activities were performed
manually. With the progress of computer technology - particularly Unix and C
languages, Software started taking over these roles. The large demand for these
services, particularly from Britain in the 1980s created an opportunity for Mahindra
British Telecom to flourish rapidly. While the company continued to grow in scale and
profits, MBT remained a niche player in Telecom vertical alone, and in the 1990s started
taking conscious steps towards building a portfolio of verticals, amidst competition from
the other major IT companies of India. MBT established office in the UK and expanded
into Germany in 2001. In 2005, MBT acquired a Texas based telecom solutions provider
called Axes Technologies, in a USD. 54 Million all cash deal, to help penetrate key US
Markets, acquire marquee customers such as Alcatel, Motorola & Paradigm and
prepare for stock exchange listing. The company renamed itself into Tech Mahindra in
2006, after buying out British Telecom’s stake. A defining moment in the history of Tech
Mahindra came with the Satyam crisis in January 2009. The Chairman of Satyam, a
highly successful Top 5 IT services provider then, admitted that he has been cooking
the books of the company to overstate revenues, and diverting fund and uncertainty,
Tech Mahindra acquired controlling stake in Satyam through a formal public auction
organized by the Government of India, and took over the operations of the company.
Tech Mahindra and Mahindra Satyam legally merged together in 2013.

Today, the Mahindra Group clocks over USD. 4.5 Billion in revenues, across 90
countries with over 800 customers from 3 distinct businesses - Tech Mahindra,
Bristlecone and Comviva - offering Information Technology services in the areas of
Business Support Systems (BSS), Operations Support Systems (OSS), Network Design
& Engineering, Next Generation Networks, Mobility, Security consulting, Testing,
Application Development & Management, Product Engineering, Remote Infrastructure
Management, BPO-Services & Consulting and Big data analytics. Forays into emerging
technologies such as Internet of Things has also been made. These distinct businesses
and activities increase the optionality for the Tech Mahindra.

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Mahindra War Room 2017 Information Technology - Digital Transformation Caselet

LIVE CHALLENGE: ACING THE ERA OF DIGITAL TRANSFORMATION

It won't be an overstatement to say that more change has happened in the last 10 years
of IT, than in the previous 50 years put together. The advent of Smartphones and
Tablets has brought technology far more closer into the daily life of people worldwide.
Ubiquitous apps now help customers with everything from hailing a cab, to buying
movie tickets to travel worldwide. Gary Kasparov recently quoted that while he beat the
Supercomputer built by IBM 2 decades ago, he will lose to a chess playing smartphone
app today. These advancements have impacted the core business of all Indian IT
companies in a very big way, and many believe the worst is yet to come.

The Indian IT revolution started in the 1980s with cost arbitrage opportunities - the
technical talent shifted to markets where the work was available, at a lower cost than
what the local talent would demand, or to fill a gap in the availability of local talent. The
inherent skill in Indian talent, coupled with a meritocratic environment found in the
developed markets, propelled this model into a tangible success for clients. Pursuing
this “easy” cost arbitrage opportunity, Indian IT companies achieved great financial
success. As these companies built credibility with clients abroad, particularly from USA,
clients started shipping work offshore to the modern IT campuses built by IT firms,
creating the ‘Onsite-Offshore’ hybrid model. The hybrid model worked well too, saving
costs and improving delivery for clients.

While the model evolved, the actual nature of services offered changed from time to
time in response to market needs - from Y2K services to critical IT & BPO processes.
The enormous success of Indian IT inspired countries such as Philippines to emulate
the Indian model over time. But this model, which has worked so well for the last 3
decades, and generated so many billions of dollars in revenues and wealth, has been
shaken by the Internet, which completes 20 years of its existence now.

The technology of the internet itself, as well as its usage, is changing radically,
disrupting industries around the world. Travel, Entertainment, Retail, Media,
Entertainment, Banking - sector after sector is being disrupted in a big way by Digital
Transformation. The large and big budget clients of the Indian IT Industry are
themselves going through this radical transformation, fighting to survive by re-
engineering their processes for a digital centric world.

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Mahindra War Room 2017 Information Technology - Digital Transformation Caselet

New movements such as Cloud, Automation etc. are derivatives of this new paradigm in
which businesses have to operate in. Today everything we can imagine is accessible at
the click of a button, causing businesses to be ready for constant customer interface,
aligning themselves by going digital even in their internal processes. This treadmill
effect forces Tech M to adopt this business model and change itself rapidly.

The era of total digital transformation is upon us. The value of information generated by
or stored in a device is much more precious than the device itself. Everything that is not
connected will get connected. All physical devices will get connected - some in real
time, some not so. For example, a shelf that is put in a department store will be linked to
the plant that is manufacturing the products there. In the past, data was classified as
Operations Data and Business Data - 2 separate entities. For the first time now,
technology is allowing machine data and business data to be available together in all
kinds of business operations. The Internet of Things is putting this through another
stretch altogether. Today, people buy their Teslas online, and track their delivery status
online. A Tesla car collects a very large amount of data and shares the same with the
company. A Tesla car knows not just about the weather or temperature, but about the
pot holes on the route as well. As they collect data differently, they operate in ways that
are different from other conventional companies. They see patterns and are able to
respond faster and better. Data is thus used for decision making, action getting and
insighting for the future. How will such approaches impact other sectors - for example,
healthcare? What if a Telecom company starts sending you call-wise bills, much like
Uber does. (It is doubtful if global scale, highly successful legacy Telecom companies
even have technologies, systems and processes that would allow them to do this.) This
is another element of anti fragility known as disruption.

Given this background, choose any one or two verticals which, in your opinion,
would be greatly impacted by Digital Transformation. It could be Communication,
Media & Entertainment, Manufacturing, Financial Services, Healthcare - you
choose. And evolve a strategy as to how a “traditional IT” company can enable
Digital Transformation in that sector. Use consumer insighting, understand
constraints and challenges, and be innovative and technology driven in your
approach. Evolve a strategy for Mahindra to ace the future of digital
transformation. If you think this can synergize with the ‘Digital India’ movement,
feel free to make the connect and explain how.

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